It will be restricted. This proposal isn't completely blocking all localhost and local IPs. Rather, it's preventing public sites from communicating with localhost and local IPs. E.g:
* If evil.com makes a request to a local address it'll get blocked.
* If evil.com makes a request to a localhost address it'll get blocked.
* If a local address makes a request to a localhost address it'll get blocked.
* If a local address makes a request to a local address, it'll be allowed.
* If a local address makes a request to evil.com it'll be allowed.
* If localhost makes a request to a localhost address it'll be allowed.
* If localhost makes a request to a local address, it'll be allowed.
* If localhost makes a request to evil.com it'll be allowed.